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Tuesday, October 11, 2011

It looks like the first line of resistance we are going to run into is 1195, as the market sure slowed down when it hit it. Of note, however, is that there is no sign of big selling as we get into the zone where selling has picked up of late. Volume is still shrinking (and making a mockery of yesterday's excuse of "Columbus Day"), so both buyers and sellers are waiting for something, perhaps a resolution to the Euro crisis of the day. We have probably run out of short sellers to cover (although we are probably getting a fresh batch now, who will be forced to cover on another move up), so barring any major news, there isn;t really anything here to propel the market higher.

I had to wait for the WTI chart to update because this chart differs significantly with the USO chart, whih looks quite a bit more bearish. This one looks like a bottom is being carved out. Even though it is hitting resistance at the 50dma, it did not drop much after hitting it, which is fairly bullish. MACD is now moving back up, so this has some momentum here, and is very likely to test the 200dma.

Gold is also looking reasonably bullish here, with a MACD that is beginning to move up. I haven;t been doing much with my options simulator lately, but options mayu be the best way to go with this: some cheap calls could make big gains if this starts moving higher, and at this point I don;t see any reason why it won't.

Treasury yields are also rising pretty dramatically, and today the 10 year gapped over the 50dma. notice that MACD has been moving up while the yield was moving down. I have been noticing MACD histogram is a very good momentum indicator, but it hasn't been working very well here.

It hasn't worked here, either. I don;t follow the forex or bond markets very closely, so I don't know how well they follow technical indicators, but it seems they don;t follow them nearly as well as the stock market. The USD ha not been updated yet, but the UUP chart is a terrible mess. It is down near the 200dma, so this is probably pretty near it as well. If there is a resolution to the current Euro crisis, this will likely drop lower, that is, until the next Euro crisis, which will probably be next week.

The short covering is probably done, so now the ball is in the buyers' court, and so far they aren;t biting. They are also, however, not selling, either, so this market is basically in a situation where it can go either way, or it can just go nowhere.

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About Me

I am not a financial professional, just a guy that trades my own account.
I am also not a musical professional, just a guy that makes music on the computer. Thus, two blogs, one trading and on musical.
And, no, the picture is not me, it is the late, great John Belushi, one of the inspirations for these blogs.

About ThIs Blog

This blog is focused on technical analysis of stocks and markets, putting heavy emphasis on chart analysis. My trading style is derived primarily from my mentor, William "Yoda" O'Neil, and the focus here is on leading and breakout stocks, but all forms of trading are covered to some extent. Economic and political news that effects the market are also topics here, and the blog may occasionally become a platform for my political and philosophical ranting. I keep several spreadsheets on Google docs which track various aspects of the market and readers are welcome to vies and comment on them.

Google Docs Spreadsheets

There are several spreadsheet that I maintain on Google docs to track various watchlists and trends in the market.

1. The earnings list - a group of small and micro cap, low float stocks that have exhibited recent rapid earnings growth. They are modeled along the lines of William O'Neil's CAN SLIM system, but limited to small cap, highly volatile stocks.

2. The relative strength list - a group of stocks which are near 52 week highs and have shown an increase in average daily volume. The list is limited to the top 200 stocks according to my methodology, which will be detailed on one of the pages of the spreadsheet.